Papers by Asish K Bhattacharyya
DECISION, 2016
The use of relative performance evaluation (RPE) to determine compensation improves contracting e... more The use of relative performance evaluation (RPE) to determine compensation improves contracting efficiency, reduces moral hazard, and provides effort incentive. This study investigates how RPE usage in CEO compensation in Indian private sector firms is associated with a firm's operating efficiency and asset productivity. It documents that firms with lower operating efficiency and asset productivity use more RPE by placing a more negative weight on their peer's performance. Further, this study documents that more RPE usage is associated with lower asset productivity in both business group-affiliated firms as well as independent firms. In contrast, more RPE usage is associated with lower operating efficiency only in independent firms. This indicates that a firm's ownership structure too plays a role in the RPE usage in Indian private sector firms.
This is a non-technical note on the Enterprise Risk Management (ERM) Framework issued by Committe... more This is a non-technical note on the Enterprise Risk Management (ERM) Framework issued by Committee for Sponsoring Organisations of the Treadway Commission (COSO). The Framework has been accepted widely across the globe. The objective of this note is to provide an overview of the Framework. COSO Framework2 identifies the following key elements: Internal environment; Objective setting; Event identification; Risk assessment; Risk response; Control activities; Information and communication; and monitoring.
Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch ge... more Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.
Good Governance, Democratic Societies and Globalisation
Introduction to Financial Statement Analysis 1 Explain the purpose of financial statement analysi... more Introduction to Financial Statement Analysis 1 Explain the purpose of financial statement analysis. 2 Understand the relationships between financial statement numbers and use ratios in analyzing and describing a company's performance. 3 Use common-size financial statements to perform comparison of financial statements across years and between companies. 4 Understand the DuPont framework and how return on equity can be decomposed into its profitability, efficiency, and leverage components. 5 Use cash flow information to evaluate cash flow ratios. 6 Understand the limitations of financial statement analysis.
The MA Journal, Mar 1, 2014
Management accounting practices in countries like India are still to catch up with management acc... more Management accounting practices in countries like India are still to catch up with management accounting practices in USA and other developed countries. The reason is that they do not face global competition. For example, Indian firms started facing competition from global firms only after opening up of the Indian economy only two decades back. As a result management accounting research is also scarce in India. Even now research in management accounting has not picked up because research with soft data not available publicly is resource intensive – in terms of money, efforts and time. Moreover, unlike USA, companies in India do not support research initiatives in the area of management accounting. Therefore, professional bodies like the Institute of Cost Accountants of India should sponsor research in the area of management accounting.This article presents an agenda for research in the area of management accounting.
Journal of Contemporary Accounting & Economics, 2016
We examine the role of the board, ownership, and CEO characteristics in CEO compensation in India... more We examine the role of the board, ownership, and CEO characteristics in CEO compensation in Indian firms. Contrary to the evidence documented in prior studies, we find that CEO compensation is not associated with board characteristics. Instead, compensation is associated with firm's ownership attributes and its CEO's tenure. We also document that leaving out CEO fixed effects in a longitudinal compensation study can lead to potentially erroneous conclusions about the role of several governance attributes in CEO compensation contracting. Finally, we find that CEO compensation attributed to ownership characteristics in the private sector is positively related to future firm performance, whereas remuneration attributed to board and CEO characteristics in both private and public sectors are not. Our evidence is consistent with efficient CEO compensation contracting, rather than CEO rent extraction, in Indian firms.
SSRN Electronic Journal, 2000
This paper explains the concept of Economic Value Added (EVA) that is gaining popularity in India... more This paper explains the concept of Economic Value Added (EVA) that is gaining popularity in India. The paper examines whether EVA is a superior performance measure both for corporate reporting and for internal governance. It relied on empirical studies in U.S.A. and other advance economies. It concluded that though EVA does not provide additional information to investors, it can be adapted as a corporate philosophy for motivating and educating employees to differentiate between value creating and value destructing activities. This would lead to direct all efforts in creating shareholder value. The paper brings to attention the dangerous trend of reporting EVA casually that might mislead investors.
SSRN Electronic Journal, 2020
Evolution of corporate governance in India from 1850 to 2020 provides significant insights into h... more Evolution of corporate governance in India from 1850 to 2020 provides significant insights into how discontinuities in the corporate Eco system impacts corporate governance practices. Although the concept of corporate governance and monitoring board emerged in 1972 in USA and spread across the globe in 1990s, after the Cadbury Committee in UK submitted its report, the issues on the governance of joint stock companies bothered regulators and academicians, and of course, minority shareholders, much before the emergence of the term corporate governance. India saw three significant structural discontinuities from 1850 to 2020. The period 1850 to 1947 was the colonial era when Indian business groups were emerging. The managing agency system emerged during that period as an institution to address the twin challenges of capital scarcity and scarcity of managerial skills. This facilitated industrialisation and also increased concentration of ownership. 1947 to 1991 was the period when the Indian government adopted the command economy framework and implemented the same through five-year plans and the licensing system. Public sector enterprises emerged as the dominating force in the Indian economy, although private sector was allowed to operate in those sectors which were not reserved for the state sector. Obtaining a license to start a new industry or expand the existing capacity was the key to the success of a business enterprise. Managing agency system continued until 1970. Some business groups consolidated their position because they could stand at the front of the queue for obtaining the licences. In the closed economy, they operated in the sellers' market. Licensing system and closed market resulted in unrelated diversification. The change in the social structure also resulted in division in business group due to the weakening of the joint family norms. Moreover, public sector development financial institutions (DFIs) acted on the behest of political bosses, often supporting the management resulting in weak corporate governance. In 1991, the Indian government opened the India economy and the country ushered into the era of market economy. Licensing system was dismantled. During the period between 1990 and 2020, the capital market developed, New entrepreneurs entered the corporate sector. Mutual fund industry achieved high growth. FDI and FPI increased very significantly, and start-ups emerged and grew. In the year 2000, for the first time, Security and Exchange Board of India (SEBI), the capital market regulator, introduced the Code of corporate governance. Indian business survived in the competitive market. The Indian corporate governance code revised number of times in the past two decade bench-marking with global best corporate governance practices. However, Indian corporate sector being dominated by the family business, the question 'how independent are independent directors' remains. With significant increase in the shareholding of FDI and FPI in top 200 companies, the average standard of corporate governance is improving.<br><br>This essay examines the evolution of corporate governance and how discontinuities impacted the evolution process. It also predicts how and why the Indian corporate governance practices are expected to improve in coming days based on the emerging trends.
This paper examines corporate governance issues in a broader perspective in the context of recent... more This paper examines corporate governance issues in a broader perspective in the context of recent government initiatives to attract FDI in India.
Global Business Review
The study examines the corporate social responsibility (CSR) strategies and activities of firms a... more The study examines the corporate social responsibility (CSR) strategies and activities of firms as disclosed in annual reports, and explores its linkages to accounting and market performance of firms. The study examines the annual reports of a sample of 30 firms (out of 50) belonging to the benchmark index of the National Stock Exchange of India and tracks these reports for evidence of CSR activities over a 5-year period from 2007 to 2011. The study employs content analysis to study CSR disclosure and classifies and rates these activities using items from an established scale followed by construction of category-wise CSR indexes. The association of these indexes with firm performance is explored through a pooled regression model after provisioning for control variables and lag effects. The study finds that CSR reporting may not have any significant impact on accounting and market performance of the firm in the short term but environment-oriented CSR disclosure may be negatively rela...
This paper explains the concept of Economic Value Added (EVA) that is gaining popularity in India... more This paper explains the concept of Economic Value Added (EVA) that is gaining popularity in India. The paper examines whether EVA is a superior performance measure both for corporate reporting and for internal governance. It relied on empirical studies in U.S.A. and other advance economies. It concluded that though EVA does not provide additional information to investors, it can be adapted as a corporate philosophy for motivating and educating employees to differentiate between value creating and value destructing activities. This would lead to direct all efforts in creating shareholder value. The paper brings to attention the dangerous trend of reporting EVA casually that might mislead investors.
Corporate Governance in India, 2016
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Papers by Asish K Bhattacharyya